Student Debt Effects on Financial Well‐being: Research and Policy Implications

Abstract

Abstract. Reviewing the data regarding effects of student debt on students' financial outcomes following college -whether successful graduation or premature exit -makes clear that there is a price to pay for having to borrow money to go to college. Indebted college graduates have lower net worth, less home equity, and compromised ability to accumulate assets, as compared to their peers with the same level of education but no student debt. They may also experience poorer educational outcomes, with independent effects on earning power and, then, later wealth accumulation. Especially given the relationship between initial household wealth and children's later educational outcomes, these findings about the post-college financial outcomes of indebted students and graduates raise the specter of ongoing, sustained, and cross-generational perpetuation of societal divides. In the United States, higher education is valued not just as a good in itself, but also as a means to the end of greater economic security and the primary lever for economic mobility. Evaluating student loans through this lens underscores the long-term, volatile, and often hidden effects of student loan dependence and raises the stakes for consideration of alternative approaches to higher education finance.

Parents, Partners, Plans and Promises: The Relational Work of Student Loan Borrowing

“…The literature on student loans examines the effects of borrowing on a range of outcomesparticularly educational attainment (Dwyer, McCloud, and Hodson 2012; McCloud 2013; Jackson and Reynolds 2013; see A. R. Baker, Andrews, and McDaniel 2017 for a review), but also economic well-being (Fry 2014;Henager and Wilmarth 2018;Elliott and Lewis 2015), mental and physical health (Walsemann, Gee, and Gentile 2015;Walsemann, Ailshire, and Gee 2016), and the achievement of life course milestones like purchasing a home (Houle and Berger 2015;Mezza et al 2019). A handful of studies have looked at the impact of borrowing on family formation, including the decisions to marry and to have children, under the assumption that increasing debt levels may be causing borrowers to delay such decisions because they do not feel they are in a financial position to make them (e.g.…”

Does Student Loan Debt Structure Young People’s Housing Tenure? Evidence from England

“…The literature on student debt and homeownership is almost exclusively focused on the North American context and unanimous in two respects. First, holding student debt is negatively associated with homeownership (Elliott and Lewis, 2015;Luong, 2010;Miller and Nikaj, 2018). Second, student debt relates negatively to housing value and equity (Elliott et al, 2013;Elliott and Lewis, 2015;Hiltonsmith, 2013).…”

“…First, holding student debt is negatively associated with homeownership (Elliott and Lewis, 2015;Luong, 2010;Miller and Nikaj, 2018). Second, student debt relates negatively to housing value and equity (Elliott et al, 2013;Elliott and Lewis, 2015;Hiltonsmith, 2013). The literature, however, is conflicted on the effect of the level of student debt.…”

“…Some researchers hypothesize that holding student debt leads to self-selection out of homeownership based on deepened debt aversion (e.g. Elliott and Lewis, 2015).…”

Should the public pay for higher education? Equality, liberty, and educational debt

“… 2. See Elliott and Lewis (2015), Cooke et al (2004), Haultain et al (2010), and Rothstein and Rouse (2011). …”